Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1005294 | The International Journal of Accounting | 2007 | 18 Pages |
Abstract
I investigate the relationship between contemporaneous stock-price performance and the persistence of accrued earnings, and its impact on the accrual anomaly. I find that, in a fiscal year, accrued earnings for stocks that have performed poorly are less persistent in predicting future earnings than accrued earnings for stocks that have performed moderately. I further find that a hedge-strategy based on accruals earns greater abnormal returns following bad-news years. The results are consistent with conservative accounting causing accrued earnings to be even less persistent in bad-news years and investors failing to efficiently price this differential in persistence.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Guohua Jiang,